CM-11-10-209C M -II -1O -Z
RECEIVED
OCT 19 2011
City Manager Approval Form
rROUNDROcK.TEXAS
.PROSPERITY
.
Item Caption: Consider a resolution authorizing the City Manager to execute an agreement with Black and Veatch Corb
Approval Date: October 21, 2011
Department Name: Finance Department
Project Manager: Becca Ramsey
Assigned Attorney: J. Kay Gayle
Item Summary:
In January 2003, the City contracted with Black and Veatch for a comprehensive water and wastewater revenue requirement
determination, cost of service analysis and rate design. In November 2006 this rate model was updated to help with changing
financial planning, rate design and implementation of a new five year Rate Plan. With the purchase of the Brushy Creek Regional
Waste Water System in 2009 and the planned opening of the Brushy Creek Regional Utility Authority's Regional Water Plant
scheduled for spring of 2012 the City and their Water and Wastewater Utilities have seen changes to their operational and capital
needs, therefore a current cost of service analysis and rate model update is needed.
No. of Originals Submitted: Two
Project Name: Water and Wastewater Rate Study update.
Cost: $37,000.00
Source of Funds: Utility Fund
Source of Funds (if applicable): Select Source Fund
Account Number:
Finance Director Approval: Cheryl Delaney
Date: 10/18/11
Department Director Approval: Cheryl Delaney Date: 10/18/11
**Electronic signature by the Director is acceptable. Please only submit ONE approval form per item.**
CIP Budget
N/A OK N/A OK
oa
Purchasing
L
N/A OK
Accounting
N/A OK
ITEMS WILL NOT BE PLACED ON THE COUNCIL OR CM AGENDA W/OUT PRIOR FINANCE AND/OR LEGAL APPROVAL
REV. 6/20/11
CITY OF ROUND ROCK
AGREEMENT FOR CONSULTING SERVICES
FOR WATER AND WASTEWATER RATE STUDIES
WITH BLACK & VEATCH CORPORATION
THIS AGREEMENT is made and entered into on this the 12th day of the month of
October , 2011, by and between the City of Round Rock, a Texas home -rule
municipal corporation, whose offices are located at 221 East Main Street, Round Rock, Texas
78664-5299 (hereinafter referred to as the "City"), and Black & Veatch Corporation, whose
offices are located at 1300 Summit Avenue, Suite 400, Fort Worth, TX 76102 (hereinafter
referred to as "Consultant").
RECITALS:
WHEREAS, City desires to contract for Consultant's assistance in providing consulting
services support while a comprehensive water and wastewater cost of service and rate study is
prepared internally by City's Finance Department; and
WHEREAS, the parties desire to enter into this Agreement to set forth in writing their
respective rights, duties and obligations hereunder;
NOW, THEREFORE, WITNESSETH:
That for and in consideration of the mutual promises contained herein and other good and
valuable consideration, the sufficiency and receipt of which are hereby acknowledged, it is
mutually agreed between the parties as follows:
1.01 EFFECTIVE DATE, DURATION, AND TERM
This Agreement shall be effective on the date it has been signed by every party hereto,
and shall remain in full force and effect unless and until it expires by operation of the term
indicated herein, or is terminated or extended as provided herein.
The term of this Agreement shall be for twelve (12) months from the effective date
hereof.
1.02 GENERAL CONDITIONS
The General Conditions contained herein shall apply to the Scope of Services, attached
hereto as Exhibit "A" and made a part hereof of all appropriate purposes. This Agreement and
such Scope of Services is entered into by and between the City of Round Rock or its subsidiaries
or affiliates (collectively "City") and Black & Veatch Corporation or any entity directly or
indirectly owned or controlled by same (collectively "B & V").
1.03 PROPOSAL FOR SERVICES
For purposes of this Agreement, Consultant has issued its Scope of Services for the
assignment(s) delineated therein. Such Scope of Services is appended to this Agreement and is
00234113/jkg
labeled as Exhibit "A." Such Scope of Services shall be deemed to incorporate the General
Conditions contained herein. Except with respect to the description of specific services and fees
for the assignment(s) delineated therein, the General Conditions of this Agreement and this
Agreement itself shall prevail over any conflicting terns therein. Taken together with the
appended Scope of Services, the General Conditions contained in this Agreement shall evidence
the entire understanding and agreement between the parties and supersede any prior proposals,
correspondence or discussions.
1.04 SCOPE OF SERVICES
Consultant shall satisfactorily provide all services described under this "Scope of
Services" category and under Exhibit "A." Consultant's undertakings shall be limited to
performing services for City and/or advising City concerning those matters on which Consultant
has been specifically engaged. Consultant shall perform its services in accordance with these
General Conditions and this Agreement, in accordance with the appended Scope of Services, in
accordance with due care, and in accordance with prevailing consulting industry standards for
comparable services.
1.05 PAYMENT FOR SERVICES; SUPPLEMENTAL AGREEMENTS
Payment for Basic Services: In consideration for the consulting services to be
performed by Consultant, City agrees to pay Consultant the following sum(s): $37,000.00.
Unless subsequently changed by additional Supplemental Agreement to this Agreement,
duly authorized by City Council or City Manager action, Consultant's total compensation
hereunder shall not exceed $37,000.00 including any Reimbursable Expenses. This amount
represents the absolute limit of City's liability to Consultant hereunder unless same shall be
changed by additional Supplemental Agreement hereto.
Deductions. No deductions shall be made from Consultant's compensation on account
of penalty, liquidated damages or other sums withheld from payments to Consultant.
Additions. No additions shall be made to Consultant's compensation based upon Project
claims, whether paid by City or denied.
Supplemental Agreements. The terms of this Agreement may be modified by written
Supplemental Agreement hereto, duly authorized by City Council or City Manager action, if City
determines that there has been a significant change in (1) the scope, complexity, or character of
the services to be performed; or (2) the duration of the work. Any such Supplemental
Agreement must be executed by both parties within the period specified as the term of this
Agreement, that being six (6) months from the effective date hereof. Consultant shall not
perform any work or incur any additional costs prior to the execution, by both parties, of such
Supplemental Agreement. Consultant shall make no claim for extra work done or materials
furnished unless and until there is full execution of any Supplemental Agreement, and City shall
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not be responsible for actions by Consultant nor for any costs incurred by Consultant relating to
additional work not directly authorized by Supplemental Agreement.
1.06 TIMETABLES
Unless otherwise indicated to Consultant in writing by City, or unless Consultant is
unreasonably delayed in the orderly progress of its work by forces beyond Consultant's control,
the following timetable structure and deliverable due dates shall apply: six (6) months from date
of execution hereof.
1.07 TERMS OF PAYMENT; REIMBURSABLE EXPENSES
Invoices. To receive payment for services, Consultant shall prepare and submit a series
of monthly invoices in a form acceptable to City. Each invoice for professional services shall
track the "Scope of Services" category herein, and shall state and detail the services performed,
along with documentation for each such service performed. All payments to Consultant shall be
made on the basis of the invoices submitted by Consultant and approved by City. Such invoices
shall conform to the schedule of services and costs in connection therewith. Should additional
backup material be requested by City, Consultant shall comply promptly with such request. In
this regard, should City determine it necessary, Consultant shall make all records and books
relating to this Agreement available to City for inspection and auditing purposes.
Payment of Invoices. City reserves the right to correct any error that may be discovered
in any invoice that may have been paid to Consultant and to adjust same to meet the
requirements of this Agreement. Following approval of invoices, City shall endeavor to pay
Consultant promptly, but no later than the time period required under the Texas Prompt Payment
Act described in Section 1.08 herein. Under no circumstances shall Consultant be entitled to
receive interest on payments which are late because of a good faith dispute between Consultant
and City or because of amounts which City has a right to withhold under this Agreement or state
law. City shall be responsible for any sales, gross receipts or similar taxes applicable to the
services, but not for taxes based upon Consultant's net income.
Offsets. City may, at its option, offset any amounts due and payable under this
Agreement against any debt (including taxes) lawfully due to City from Consultant, regardless of
whether the amount due arises pursuant to the terms of this Agreement or otherwise and
regardless of whether or not the debt due to City has been reduced to judgment by a court.
No Reimbursable Expenses. No additional reimbursable expenses, over and above the
total payment amount of $37,000.00, are authorized hereunder. Travel expenses up to the
maximum amount of $3,000.00 are included in the total payment amount of $37,000.00.
1.08 PROMPT PAYMENT POLICY
In accordance with Chapter 2251, V.T.C.A., Texas Government Code, payment to
Consultant will be made within thirty (30) days of the day on which City receives the.
performance, or within thirty (30) days of the day on which the performance of services was
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complete, or within thirty (30) days of the day on which City receives a correct invoice for the
performance or services, whichever is later. Consultant may charge a late fee (fee shall not be
greater than that which is permitted by Texas law) for payments not made in accordance with
this Prompt Payment Policy; however, this policy does not apply to payments made by City in
the event:
1. There is a bona fide dispute between City and Consultant concerning the services
performed that causes the payment to be late; or
2. The terms of a federal contract, grant, regulation, or statute prevent City from
making a timely payment with federal funds; or
3. There is a bona fide dispute between Consultant and a subcontractor or between a
subcontractor and its supplier concerning the services performed which causes the
payment to be late; or
4. The invoice is not mailed to City in strict accordance with instructions, if any, on
any purchase order or this Agreement.
1.09 NON -APPROPRIATION
This Agreement is a commitment of City's current revenues only. It is understood and
agreed that City shall have the right to terminate this Agreement at the end of any City fiscal year
if the governing body of City does not appropriate funds sufficient to purchase the services as
determined by City's budget for the fiscal year in question. City may effect such termination by
giving Consultant a written notice of termination at the end of its then -current fiscal year.
1.10 TERMINATION OR DEFAULT
Termination. In connection with the work outlined in this Agreement, it is agreed and
fully understood by Consultant that City may cancel or indefinitely suspend further work
hereunder or terminate this Agreement either for cause or for the convenience of City, upon
fifteen (15) days' written notice to Consultant, with the understanding that immediately upon
receipt of said notice all work and labor being performed under this Agreement shall cease.
Consultant shall invoice City for all work satisfactorily completed and shall be compensated in
accordance with the terms of this Agreement for all work accomplished prior to the receipt of
said notice. No amount shall be due for lost or anticipated profits. Unless otherwise specified
herein, all plans, field surveys, maps, cross sections and other data, designs and work related to
the Project shall become the property of City upon termination of this Agreement, and shall be
promptly delivered to City in a reasonably organized form without restriction on future use.
Should City subsequently contract with a new consultant for continuation of services on the
Project, Consultant shall cooperate in providing information for an additional fee.
Default. Nothing contained in the preceding paragraph shall require City to pay for any
work which is unsatisfactory as determined by City or which is not submitted in compliance with
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the terms of this Agreement. City shall not be required to make any payments to Consultant
when Consultant is in default under this Agreement, nor shall this paragraph constitute a waiver
of any right, at law and at equity, which City may have if Consultant is in default, including the
right to bring legal action for damages or to force specific performance of this Agreement.
1.11 CITY'S RESPONSIBILITIES
Full information. City shall provide full information regarding Project requirements.
City shall have the responsibility of providing Consultant with such documentation and
information as is reasonably required, if any, to enable Consultant to provide the services called
for. City shall cause its employees and any third parties who are otherwise assisting, advising or
representing City to cooperate on a timely basis with Consultant in the provision of its services.
Consultant may rely upon written information provided by City and its employees and agents as
accurate and complete. Consultant may rely upon any written directions provided by City and its
employees and agents concerning provision of services.
Designate representatives. City shall designate, when necessary, representatives
authorized to act in its behalf. City shall examine documents submitted by Consultant and render
decisions pertaining thereto promptly to avoid unreasonable delay in the orderly progress of
Consultant's work.
1.12 INDEPENDENT CONTRACTOR STATUS
Consultant is an independent contractor, not City's employee. Consultant's employees or
subcontractors are not City's employees. This Agreement does not create a partnership
relationship. Neither party has authority to enter into contracts as agent for the other party.
Consultant and City agree to the following tights consistent with an independent contractor
relationship:
1. Consultant has the right to perform services for others during the term of this
Agreement; and
2. Consultant has the sole right to control and direct the means, manner and method
by which services required by this Agreement will be performed; and
3. Consultant has the right to hire assistants as subcontractors, or to use employees
to provide the services required by this Agreement; and
4. Consultant or Consultant's employees or subcontractors shall perform the services
required by this Agreement. City shall not hire, supervise, or pay any assistants
to help Consultant; and
5. Neither Consultant nor Consultant's employees or subcontractors shall receive
any training from City in the skills necessary to perforni the services required by
this Agreement; and
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6. City shall not require Consultant or Consultant's employees or subcontractors to
devote full time to performing the services required by this Agreement; and
7. Neither Consultant nor Consultant's employees or subcontractors are eligible to
participate in any employee pension, health, vacation pay, sick pay, or other
fringe benefit plan of City.
1.13 CONFIDENTIALITY; DISPOSITION OF MATERIALS
Each party shall take reasonable measures to preserve the confidentiality of any
proprietary or confidential information provided to it in connection with this engagement,
provided that no claim may be made for any failure to protect information that occurs more than
two (2) years after the termination or expiration of this Agreement.
At the conclusion of the engagement, upon written request, each party shall return to the
other all materials, data and documents that have been provided to the other party, except that
Consultant may retain one (1) copy of City's materials for its archival purposes, subject to
Consultant's confidentiality obligations hereunder. City shall retain ownership of all data and
materials provided by it to Consultant. Original drawings shall remain the property of
Consultant. Consultant shall provide City with one (1) signed set of reproducibles and one (1)
full set of digital file copies.
1.14 LIMITATION 01? LIABILITY
Should any of Consultant's services not conform to the requirements of this Agreement
and the appended Scope of Services, then and in that event City shall give written notification to
Consultant; thereafter, Consultant shall either (a) promptly re -perform such services to City's
satisfaction at no additional charge, or (b) promptly refund the portion of the fees paid with
respect to such services.
In the event that re -performance of services or refund of applicable fees would not
provide an adequate remedy to City for damages arising from the performance, nonperformance
or breach of this Agreement and the appended Scope of Services, then and in that event
Consultant's maximum total liability, including that of any employee, affiliate, agent or
contractor, relating to its services, regardless of the cause of action, shall be Iimited to direct
damages in an amount not to exceed the total fees payable under this Agreement.
The foregoing limitation of liability shall not apply to the extent that any liability arises
from the gross negligence or willful misconduct of Consultant, its employees, affiliates, agents or
contractors, or from bodily injury, death of any person, or damage to real or tangible personal
property. Neither party shall be liable for any indirect, special or consequential damages.
1.15 INDEMNIFICATION
Consultant agrees to hold harmless, defend, and indemnify City for and from any third
party claim or liability (including reasonable defense costs and attorneys' fees) to the extent
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arising from or in connection with the negligence of Consultant or its employees or agents in the
course of performing services. The limitation of liability set forth in Section 1.14 herein applies
to Consultant's indemnity obligations pursuant to this Section 1.15, but the limitation shall not
apply to the extent that any liability arises from the gross negligence or willful misconduct of
Consultant, its employees, affiliates, agents or contractors or from bodily injury, death of any
person, of damage to any real or tangible personal property.
Except to the extent that Consultant is obligated to indemnify City, and only to the extent
allowable by law, City shall indemnify and hold Consultant, its employees, affiliates or agents
harmless from any third party claim or liability (including reasonable defense costs and
attorneys' fees) to the extent arising from or in connection with the services performed by
Consultant or City's use thereof.
1.16 INSURANCE
Insurance. Consultant, at Consultant's sole cost, shall have and maintain during the term
of this Agreement professional liability insurance coverage in the minimum amount of
$1,000,000.00 Dollars from a company authorized to do insurance business in Texas and
otherwise acceptable to City.
Subconsultant Insurance. Without limiting any of the other obligations or liabilities of
Consultant, Consultant shall require each subconsultant performing work under this Agreement
to maintain during the term of the Agreement, at the subconsultant's own expense, the same
stipulated minimum insurance required in the immediately preceding paragraph, including the
required provisions and additional policy conditions as shown below. As an alternative,
Consultant may include its subconsultants as additional insureds on its own coverages as
prescribed under these requirements. Consultant's certificate of insurance shall note in such
event that the subconsultants are included as additional insureds.
Consultant shall obtain and monitor the certificates of insurance from each subconsultant
in order to assure compliance with the insurance requirements. Consultant must retain the
certificates of insurance for the duration of this Agreement, and shall have the responsibility of
enforcing these insurance requirements among its subconsultants. City shall be entitled, upon
request and without expense, to receive copies of these certificates of insurance.
Insurance Policy Endorsements. Each insurance policy hereunder shall include the
following conditions by endorsement to the policy:
(1) Each policy shall require that thirty (30) days prior to the expiration, cancellation,
non -renewal or any material change in coverage, a notice thereof shall be given to
City by certified mail to:
City Manager, City of Round Rock
221 East Main Street
Round Rock, Texas 78664
Consultant shall also notify City, within 24 hours of receipt, of any notices of expiration,
cancellation, non -renewal, or material change in coverage it receives from its insurer.
(2) Companies issuing the insurance policies shall have no recourse against City for
payment of any premiums or assessments for any deductibles which all are at the sole
responsibility and risk of Consultant.
(3) Terms "City" or "City of Round Rock" shall include all authorities, boards,
commissions, departments, and officers of City and individual members, employees and
agents in their official capacities, or while acting on behalf of the City of Round Rock.
(4) The policy clause "Other Insurance" shall not apply to any insurance coverage
currently held by City, to any future coverage, or to City's Self -Insured Retentions of
whatever nature.
Cost of Insurance. The cost of all insurance required herein to be secured and
maintained by Consultant shall be borne solely by Consultant, with certificates of insurance
evidencing such minimum coverage in force to be filed with the City. Such Certificates of
Insurance shall be furnished to the City upon request.
1.17 COMPLIANCE WITH LAWS, CHARTER AND ORDINANCES
Compliance with Laws. Consultant, its consultants, agents, employees and
subcontractors shall use best efforts to comply with all applicable federal and state laws, the
Charter and Ordinances of the City of Round Rock, as amended, and with all applicable rules
and regulations promulgated by local, state and national boards, bureaus and agencies.
Consultant shall further obtain all permits and licenses required in the performance of the
services contracted for herein.
Taxes. Consultant will pay all taxes, if any, required by law arising by virtue of the
services performed hereunder. City is qualified for exemption pursuant to the provisions of
Section 151.309 of the Texas Limited Sales, Excise, and Use Tax Act.
1.18 FINANCIAL INTEREST PROHIBITED
Consultant covenants and represents that Consultant, its officers, employees, agents,
consultants and subcontractors will have no financial interest, direct or indirect, in the purchase
or sale of any product, materials or equipment that will be recommended or required for the
construction of the Project.
1.19 ASSIGNMENT AND DELEGATION
The parties each hereby bind themselves, their successors, assigns and legal
representatives to each other with respect to the terms of this Agreement. Neither party shall
assign, sublet or transfer any interest in this Agreement without prior written authorization of the
other party.
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1.20 LOCAL, STATE AND FEDERAL TAXES
Consultant shall pay all income taxes, and FICA (Social Security and Medicare taxes)
incurred while performing services under this Agreement. City will not do the following:
1. Withhold FICA from Consultant's payments or make FICA payments on
Consultant's behalf; or
2. Make state and/or federal unemployment compensation contributions on
Consultant's behalf; or
3. Withhold state or federal income tax from Consultant's payments.
1.21 NOTICES
All notices and other communications in connection with this Agreement shall be in
writing and shall be considered given as follows:
1. When delivered personally to the recipient's address as stated in this Agreement;
or
2. Three (3) days after being deposited in the United States snail, with postage
prepaid to the recipient's address as stated in this Agreement.
Notice to Consultant:
Black & Veatch Corporation
1300 Summit Avenue, Suite 400
Fort Worth, TX 76102
Notice to City:
City Manager
221 East Main Street
Round Rock, TX 78664
AND TO:
City Attorney
309 East Main Street
Round Rock, TX 78664
Nothing contained herein shall be construed to restrict the transmission of routine
communications between representatives of City and Consultant.
1.22 APPLICABLE LAW; ENFORCEMENT AND VENUE
This Agreement shall be enforceable in Round Rock, Williamson County, Texas, and if
legal action is necessary by either party with respect to the enforcement of any or all of the terms
or conditions herein, exclusive venue for same shall lie in Williamson County, Texas. This
Agreement shall be governed by and construed in accordance with the laws and court decisions
of the State of Texas.
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1.23 EXCLUSIVE AGREEMENT
This document, and all appended documents, constitutes the entire Agreement between
Consultant and City. This Agreement may only be amended or supplemented by mutual
agreement of the parties hereto in writing.
1.24 DISPUTE RESOLUTION
If a dispute or claim arises under this Agreement, the parties agree to first try to resolve
the dispute or claim by appropriate internal means, including referral to each party's senior
management. If the parties cannot reach a mutually satisfactory resolution, then and in that event
any such dispute or claim will be sought to be resolved with the help of a mutually selected
mediator. If the parties cannot agree on a mediator, City and Consultant shall each select a
mediator and the two mediators shall agree upon a third mediator. Any costs and fees, other than
attorney fees, associated with the mediation shall be shared equally by the parties.
City and Consultant hereby expressly agree that no claims or disputes between the parties
arising out of or relating to this Agreement or a breach thereof shall be decided by any arbitration
proceeding, including without limitation, any proceeding under the Federal Arbitration Act (9
USC Section 1-14) or any applicable state arbitration statute.
1.25 SEVERABILITY
The invalidity, illegality, or unenforceability of any provision of this Agreement or the
occurrence of any event rendering any portion or provision of this Agreement void shall in no
way affect the validity or enforceability of any other portion or provision of this Agreement. Any
void provision shall be deemed severed from this Agreement, and the balance of this Agreement
shall be construed and enforced as if this Agreement did not contain the particular portion or
provision held to be void. The parties further agree to amend this Agreement to replace any
stricken provision with a valid provision that comes as close as possible to the intent of the
stricken provision. The provisions of this section shall not prevent this entire Agreement from
being void should a provision which is of the essence of this Agreement be determined void.
1.26 MISCELLANEOUS PROVISIONS
Time is of the Essence. Consultant understands and agrees that time is of the essence and
that any failure of Consultant to complete the services for each phase of this Agreement within
the agreed Project schedule will constitute a material breach of this Agreement. Consultant shall
be fully responsible for its delays or for failures to use best efforts in accordance with the terms
of this Agreement. Where damage is caused to City due to Consultant's failure to perform in
these circumstances, City may withhold, to the extent of such damage, Consultant's payments
hereunder without waiver of any of City's additional legal rights or remedies. City shall render
decisions pertaining to Consultant's work promptly to avoid unreasonable delays in the orderly
progress of Consultant's work.
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Force Majeure. Neither City nor Consultant shall be deemed in violation of this
Agreement if it is prevented from performing any of its obligations hereunder by reasons for
which it is not responsible or circumstances beyond its control. However, notice of such
impediment or delay in performance must be timely given, and all reasonable efforts undertaken
to mitigate its effects.
Opinions. Consultant's opinions, estimates, projections, forecasts of current and future
costs, revenues, other levels of any sort, and events shall be made on the basis of available
information and Consultant's expertise and qualifications as a professional. Consultant does not
warrant or guarantee that its opinions, estimates, projections or forecasts of current and future
levels and events will not vary from City's estimates or forecasts or from actual outcomes.
IN WITNESS WHEREOF, City and Consultant have executed this Agreement on the
dates indicated.
CITY OF ROUND ROCK, TEXAS
By:
Title:
Date Signed.
BLACK & VEATCH CORPORATION
By:
Title: President
Date Signed: 10/12/2011
*Reviewed by Legal(Grimaldi)10/11/2011.
Reviewed by PM(McCartney) 10/11/2011.
ATTACHMENTS
Exhibit "A": Scope of Services
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FOR CITY, ATTEST:
Sara L. White, City Secretar
Date Signed: I (�.• l 1
F t R CITY, APPROVED AS TO FORM:
Step ' : n .Sheets it
, y Attorney
SCOPE OF SERVICES
The City of Round Rock, Texas ("Round Rock") has requested Black & Veatch Corporation
(`BIack & Veatch") to provide consulting services support while a comprehensive water and
wastewater cost of service & rate study is prepared internally by the Round Rock Finance
Department. It is anticipated that this project will commence in October 2011 and conclude at
the end of February 2012. Black & Veatch will provide Round Rock with a standard Data
Request List as soon as feasible after receipt of a purchase order so the compilation of
data/information by Round Rock can proceed in a timely manner. Black & Veatch's scope of
work will be limited as described in the following tasks:
WATER AND WASTEWATER COST OF SERVICE& RATE STUDY
PHASE 1 - PROJECT INITIATION
Task 1: Data Collection - Round Rock.
Task 2: Data Review - Round Rock.
Task 3: Idents Goals and Objectives — Round Rock (Black & Veatch will
provide guidance on potential rate structures encouraging conservation
and potential changes to the retail rate structure).
PHASE II - RATE DETERMINANTS AND REVENUE REQUIREMENTS
Task 1: Idem* & Determine Rate Determinants — Round Rock (Black & Veatch
will provide guidance on growth rate projections regarding account
connections, determination of normalized annual billing determinants,
and the possible migration front 70% of water usage to a winter quarter
average on Wholesale Wastewater Customer billing volumes).
Task 2: Determine Net Revenue Requirements- Round Rock (Black & Veatch will
provide consultation on the Brushy Creek Regional Utility Authority
operating cost increases).
PHASE III - FIVE-YEAR PROJECTED OPERATING RESULTS (FY 2012 — 2016)
Task 1: Project Net Revenue Requirements — Round Rock (Black & Veatch will
provide guidance on expected it fiation rates for operation &
maintenance e'tpenses).
Task 2: Project User Rate and Charge Revenues — Round Rock (Black & Veatch
will provide guidance on growth rale projections).
Task 3: Develop Projected Operating Results — Round Rock
Task 4: Review Results — Round Rock (Black & Veatch will provide consultation
on Transfers to the General Fund (both the amount of transfers and
timing). The phase-in of large General Fund Transfer increases will
also be considered in consultation with Black & Veatch.
PHASE IV - COST OF SERVICE ANALYSIS & RATE DESIGN
Task 1: Conduct Cost of Service Analysis and Allocation of Revenue
Requirements - Round Rock
Task 2: Design Water Rates — Round Rock (Black & Veatch will provide
guidance on potential rate structures encouraging conservation and
potential changes to the retail rate structure).
Task 3: Prepare Customer Impact Analysis/Rate Comparisons — Round Rock
EXHIBIT
PHASE V - REPORTS AND PRESENTATIONS
Task 1: Prepare & Provide an Electronic Copy of Draft Report — Black &
Veatch with assistance from Round Rock
Task 2: Review Draft Report — Round Rock
Task 3: Prepare Formal Presentation and Present Final Report - Ten (10) Hard
Bound Copies and an Electronic Copy - Black & Veatch with assistance
from Round Rock.
PHASE 1 - PROJECT INITIATION
Task 1- Data Collection
Purpose: To obtain data and information necessary to develop a projection of revenue
requirements, customer base and other data needed to perform the cost of service
analysis and rate design.
Subtasks: This task will require completion of the following subtasks:
1.1
If necessary, Round Rock will issue follow-up data requests to various
Departments for additional information and/or to clarify any data -related
questions.
Task 2 - Data Review
Purpose: To gain an understanding of the information gathered and ensure that such
information is sufficient and in the correct format to complete the project.
Subtasks: This task will require completion of the following subtasks:
2.1 Round Rock to review available background documents related to water &
wastewater operations; and
• Operating and capital budgets, as well as audited financial
statements;
• Official Statements or other related documents for current
outstanding debt obligations;
• Projected capital outlays for ongoing and future projects;
• Renewal & Replacement, Rate Stabilization and other Reserve
Funds;
• Current and historical customer information;
• Operating statistics (gallons of water pumped, gallons of
wastewater treated, etc.); and
• All wholesale service contracts established by Round Rock.
2.2 Round Rock will review its existing water & wastewater rate schedules
and policies.
Task 3 - Identify► Goals and Objectives
Purpose: To ensure that rates and charges developed directly correlate to Round Rock's
goals and objectives relating to operations and rate setting policies.
Subtasks: This task will require completion of the following subtasks:
3.1 Round Rock will discuss internally and identify rate -making goals and
objectives including, but not limited the following:
Rate and revenue stability;
Full cost recovery;
• Minimizing rate impact on customers;
• Comparability with neighboring utilities;
• Equitable application among and within customer classes;
• Ease of implementation; and
• Administrative efficiency.
3.2 Round Rock will discuss internally the conceptual rate design strategy and
accompanying rate structure based upon the defined objectives. Black &
Veatch will provide guidance on potential rate structures encouraging
conservation and potential changes to the retail rate structure.
PHASE II - RATE DETERMINANTS AND REVENUE REQUIREMENTS
Task 1 - Identify & Determine Rate Determinants
Purpose: To gain an understanding of the customer base and usage characteristics
associated with the water & wastewater system. The water & wastewater
systems' billing determinants in the form of customer counts and the associated
usage provide the revenues necessary to operate the systems and are the primary
factors utilized in developing proposed user rates and charges.
Subtasks: This task will require completion of the following subtasks:
1.1 Round Rock will review historical customer and billing data;
1.2 Round Rock will identify customer classifications based on the current
and anticipated customer mix;
1.3 Round Rock will identify customer usage characteristics within each
customer class;
1.4 Round Rock will utilize historical growth statistics and recent trends in
consultation with Black & Veatch to develop a projection of water &
wastewater system customers and volumes into the future; and
1.5 Round Rock will determine normalized annual billing determinants and
the possible migration from 70% of water usage to a winter quarter
average on Wholesale Wastewater Customer billing volumes in
consultation with Black & Veatch.
Task 2 - Determine Net Revenue Requirements
Purpose: To ensure all costs incurred to provide water & wastewater service are recovered
from proposed user rates and charges.
Subtasks: This task will require completion of the following subtasks:
2.1 Round Rock will review and identify applicable operating costs;
2.2 Black & Veatch will provide Round Rock consultation on the Brushy Creek
Regional Utility Authority operating cost increases.
2.3 Round Rock will determine anticipated non-operating and capital costs to
be recovered through rates (including debt service and related reserves and
coverage requirements, capital outlays, transfers, renewal and replacement
costs, etc.);
2.4 Round Rock to determine pro -forma adjustments as necessary for the
fiscal year in which rates will be developed (the "Test Year"); and
2.5 Round Rock will review other available sources of revenue used offset
revenue requirements.
PHASE III - FIVE-YEAR PROJECTED OPERATING RESULTS (FY 2012 - 2016)
Task 1 - Project Net Revenue Requirements
Purpose: To provide an estimate of expenditures anticipated in future years and establish a
basis for projecting future revenue needs.
Subtasks: This task will require completion of the following subtasks:
1.1
Round Rock will determine estimated Test Year revenue requirements,
outstanding debt service schedules, and the adopted capital improvements
program (CIP) as a basis for performing projections; and
1.2 Round Rock will determine inflationary and customer growth factors in
consultation with Black & Veatch to project the revenue requirements
through the projection period on a line -item by line -item basis.
Task 2 - Project User Rate and Charge Revenues
Purpose: To provide an estimate of user rate and charge revenues that will be derived from
the application of proposed rates. The projected customers and volumes will be
utilized in conjunction with any anticipated rate adjustments necessary to meet
projected revenue requirements.
Subtasks: This task will require completion of the following subtasks:
2.1 Round Rock will apply proposed water & wastewater rates to projected
customers and volumes in order the estimate the revenues that will be
generated as a result of normal customer growth; and
2.2 Round Rock will compare projected revenues to estimated revenue
requirements in order to determine the approximate revenue
surpluses/deficits for each fiscal year of the projection period; and
2.3 Black & Veatch will provide guidance to Round Rock on growth rates for
the projection of User Rate and Charge Revenues.
Task 3 - Develop Projected Operating Results
Purpose: To provide a summary estimate of the cash flows related to operating the water &
wastewater systems.
Subtasks: This task will require completion of the following subtasks:
3.1 Round Rock will develop a schedule of the projected operating results that
provides a summary of projected revenues and accompanying revenue
requirements for each fiscal year of the projection period; and
3.2 Round Rock will utilize summary results to identify the order of
magnitude of water & wastewater rate adjustments required in future
years.
Task 4 - Review Results
Purpose: To review the summary estimate of the cash flows related to operating the water
& wastewater systems.
Subtasks: This task will require completion of the following subtasks:
4.1 Round Rock Staff will meet and review the water & wastewater system
operating results over the planning period. Any potential changds to
projected revenue requirements and/or customer growth should be
finalized after obtaining Black & Veatch's consultation on Transfers to the
General Fund (both the amount of transfers and timing). The phase-in of large
General Fund Transfer increases will also be considered through consultation
with Black & Veatch.
PHASE IV - COST OF SERVICE ANALYSIS & RATE DESIGN
Task 1- Conduct Cost of Service Analysis and Allocation of Revenue Requirements
Purpose: To establish an equitable rate structure, determine the appropriate rate
components and develop a methodology for allocating the revenue requirements
to applicable rate components. The allocation of revenue requirements will define
the total costs to be recovered through each component of the rate structure.
Subtasks: This task will require completion of the following subtasks:
1.1 Round Rock staff will review the existing rate structure for equity of
application to customers, and consistency with the objectives of the City;
1.2 Round Rock will develop a cost of service analysis to fairly and equitably
allocate costs to the various customer classes;
1.3 Round Rock will propose rate structure modifications as necessary to
satisfy the primary objectives, and Black & Veatch will provide guidance
on potential rate structures encouraging conservation and any potential
changes to the retail rate structure; and
1.4 Round Rock will establish rate components based on the proposed rate
structure.
Task 2 - Design Water Rates
Purpose: To calculate a schedule of water & wastewater user rates and charges that
equitably recover projected net revenue requirements.
Subtasks: This task will require completion of the following subtasks:
2.1 Round Rock will determine monthly charges based on allocated revenue
requirements and billing determinants, including:
Customer costs; and
Volumetric rates.
The Customer charges developed above by Round Rock will reflect the
utility's fixed cost to service an individual customer, whether or not that
customer is currently taking water service or not.
2.2 Round Rock will prepare a revenue analysis to ensure that proposed rates
as applied to estimated customers and volumes will generate sufficient
revenue to meet the projected revenue requirements.
2.3 Once the proposed rates are developed, they will be evaluated to ensure
that: (i) they comply with the goals and objectives set forth by Round
Rock, and (ii) they are compatible with the requirements of the TCEQ.
2.4 Additionally, proposed rates will be addressed to identify any potential
impact on system revenues due to an increase in rate levels or changes in
rate structure.
2.5 Black & Veatch will prepare a Technical Memorandum on Reuse Water
Rates if requested by Round Rock.
Task 3 - Prepare Customer Impact Analysis/Rate Comparisons
Purpose: To assess the impact of proposed rates upon various classes of customers with
different usage levels. In addition, the comparability of proposed rates to other
neighboring utility systems will be addressed.
Subtasks: This task will require completion of the following subtasks:
3.1 Round Rock will update the impact assessment analysis section within the
financial planning & rate model for the proposed rates and classes of users
identified in the rate study;
3.2 Round Rock will update the impact assessment analysis section within the
financial planning & rate model for the proposed rates compared to
existing rates; and
3.3 Round Rock will prepare rate comparisons of proposed rates versus those
of other neighboring utilities.
PHASE V - REPORTS AND PRESENTATIONS
Task 1 - Prepare and Provide an Electronic Copy of Draft Report
Purpose: Black & Veatch will present the preliminary study findings and recommendations
in a draft report format for review by Round Rock Staff.
Subtasks: This task will require completion of the following subtasks:
1.1
Black & Veatch will prepare and forward an electronic copy of the draft
report in a near -final format to be reviewed, changed, and/or corrected as
necessary by Round Rock.
Task 2 - Review Draft Report
Purpose: Round Rock Staff and Black & Veatch will discuss and document any necessary
changes to the report as well as its financial planning & rate model.
Subtasks: This task will require completion of the following subtasks:
2.1 Black & Veatch will discuss preliminary findings with Round Rock staff
via a teleconference call; and
2.2 Black & Veatch will incorporate any changes and/or corrections provided
by Round Rock Staff into the report. Round Rock will make any
subsequent changes and/or corrections in the financial planning & rate
model.
Task 3 - Prepare Formal Presentation and Present Final Report — Provide Ten (ID) Hard
Bound Copies and an Electronic Copy
Purpose: To document the overall findings in a complete and concise report for
presentation to Round Rock.
Subtasks: This task will require completion of the following subtasks:
3.1 Black & Veatch will prepare and deliver ten (10) hard bound copies of the
final report as well as an electronic copy;
3.2 Black & Veatch will attend one meeting with Round Rock Staff whereby a
formal presentation will be developed and presented;
3.3 Black & Veatch will attend one meeting with the,Round Rock City
Council whereby a formal presentation will be developeand presented;
3.4 Black & Veatch will attend one meeting with the Round Rock Wholesale
Customers whereby a formal presentation will be developed and presented;
and
3.5 Black & Veatch will attend a City Council Meeting in which proposed
water and wastewater rates are to be discussed for adoption.
Supplemental Scope of Services for Round Rock, TX - Fall 2011
Cost of Service & Rate Study Guidance & Report
JCorrespondina to Phase I - Phase V, Task 1,2 Inclusivel
Provide the City of Round Rock with consultation and guidance during the development
of the FY 2012 Cost of Service & Rate Study by the Round Rock Finance Department.
Potential issues requiring consultation and guidance during the Cost of Service & Rate
Study include the following items:
1. Consultation on Transfers to the General Fund (guidance on both the amount of
transfers and timing) (consider phase-in of large General Fund Transfer
increases).
2. Guidance on growth rate assumptions (Account Connections) and expected
inflation rates for operation & maintenance expenses.
3. Guidance on potential rate structures encouraging conservation.
4. Guidance on Wholesale Wastewater Customer billing volumes (possible
migration from 70% of water usage to a winter quarter average).
5. Consultation on potential changes on the retail rate structure.
6. Consultation on determination of normalized annual billing determinants.
7. Consultation on Brushy Creek Regional Utility Authority operating cost increases.
8. Consultation on Reuse Water Rates (potential technical memorandum to be
issued).
In addition, Black & Veatch will develop a Cost of Service & Rate Study Report for
Round Rock based on Black & Veatch's Review of the completed Financial Planning &
Rate Model. This report will include an Executive Summary.
The estimated cost for this portion is $20,400 (120 hours at $170/hour).
Required Meetings
'CorrespondInn to Phase V, Task 31
After completion of the Cost of Service & Rate Study Report, formal presentations will be
developed and presented to Round Rock City Management as well as the City Council.
Attendance at a City Council Meeting in which projected water and wastewater rates are
to be discussed for adoption is also anticipated.
A formal presentation will also be developed and presented for the Wholesale Customer
Class.
The estimated cost for this portion is $16,600, including travel (80 hours at $170/hour
and travel expenses of $3,000).
Any additional meetings are estimated to cost $2,000 per consultant, which includes
travel expenses.